Buying abandoned property: Pros and cons
Passing by an abandoned home, you might sense an opportunity. Behind its weathered walls and ramshackle exterior lies both mystery and, just maybe, a potential investment opportunity. But before looking to buy such a property, it might be worthwhile to determine whether it is truly abandoned or just vacant for an extended period. Let’s look at what it means for a property to be abandoned and some potentially worthwhile considerations for buying abandoned property.
What is abandoned property?
In legal terms, abandoned property refers to a property intentionally left behind by an owner with no plans to return or maintain it. Abandoned properties can easily be mistaken for a vacant property, but it’s worth understanding the difference as a property’s ownership status can impact its availability and the purchase process.
Abandoned vs. vacant properties
An abandoned property is one where the owner has forfeited all legal rights and claims to the property. This can occur for various reasons, such as foreclosure, natural disasters or the owner’s financial difficulties. Oftentimes, ownership of an abandoned property may have already reverted to the state or a financial institution.
On the other hand, a vacant property is similarly unoccupied but still under the control of the original owner. Vacant properties can arise in numerous ways, such as the homeowner moving away without selling the property or a landlord failing to maintain rental property to the point it becomes uninhabitable.
Both abandoned and vacant properties can fall into disrepair over time, with vacant properties appearing to be abandoned and vice versa. But the legal distinction between the two can dictate how you navigate the home buying process.
Can you buy an abandoned house?
Yes, you may be able to buy an abandoned house, though the process can be more complicated than purchasing a traditional property. Some abandoned properties may indeed present a worthwhile financial opportunity, but they may also pose potential risks and challenges. Understanding the pros and cons before you buy an abandoned house can help you make an informed decision about your purchase.
Should you buy an abandoned property?
When considering whether or not to buy an abandoned house, it usually makes sense to carefully weigh the potential advantages and disadvantages involved. Let’s look at some of these factors:
Abandoned property upsides
For some people, buying an abandoned property might be an attractive investment opportunity for several reasons:
- Lower purchase price: Abandoned properties often come with lower price tags, as they are typically sold below market value due to their status and need for repairs.
- Reduced competition: Since buying abandoned houses can be more complex and time-consuming than a standard home, you may face fewer competing offers for the property.
- Opportunity for customization: For homes purchased in a state of disrepair, the renovation process may provide an opportunity to customize the property and turn it into a forever home or ideal rental property.
Abandoned property downsides
For all their potential pros, some possible complications to consider before buying abandoned houses include:
- Hidden costs: Abandoned properties may require extensive repairs and renovations. There may also be unpaid taxes, liens or other debts associated with the property that you would need to address.
- Financial hurdles: Obtaining a mortgage for an abandoned home could be more difficult, as lenders may be hesitant to finance a property in disrepair.
- Legal complications: The process of buying abandoned houses has the potential to involve complex legal issues depending on the circumstances of its abandonment.
How to buy abandoned property
Wondering how to purchase abandoned property? Typically, purchasing an abandoned property requires careful research, planning and decision-making. Let’s walk through some of the steps for finding and buying an abandoned property given the pros and cons covered earlier.
Finding abandoned property
The first step in buying abandoned houses is to locate potential properties of interest. You can do this by scouting different neighborhoods on your own, looking to identify potentially abandoned homes by eye. There are also online listings and auction sites for properties classified as abandoned or in foreclosure. Additionally, local government agencies such as the county recorder’s office may have information on tax-delinquent properties that could be worth looking at.
Contacting the owner
Once you’ve identified an abandoned property of interest, the next step is often to try and find the current owner. You may be able to check property records at the county recorder’s office or online or contact the local tax assessor’s office for ownership details. With a little luck, you might even be able to successfully identify the owner of a property with a few online searches.
Once you’ve found the property’s owner, the next step is typically to express your interest in purchasing the property and to discuss potential terms.
Conducting an inspection
Before committing to buying an abandoned property, however, it’s often recommended to conduct a thorough inspection so you can assess the property’s condition and identify any potential issues. As part of your inspection, you may want to consider:
- Hiring a professional home inspector to evaluate the property’s structural integrity, foundation, electrical systems, plumbing and other key components.
- Conducting an environmental assessment to check for potential hazards, such as mold, asbestos or lead paint.
- Consulting with a contractor to estimate the cost of repairs and renovations.
Making a decision
Once you’ve found a property of interest, tried to contact the owner and conducted a thorough inspection, it’s time to decide. Keeping in mind the potential pros and cons earlier might help formulate the potential risks and rewards of the property in question. If you choose to proceed, consider working with a qualified real estate attorney to help navigate the legal process.
An abandoned property might just be a worthwhile investment opportunity, but the process of assessing and buying the property may be more complex than a traditional home. Carefully weighing the potential pros and cons of an abandoned home and the homebuying process can help you make an informed decision about the future of that potential diamond in the rough.